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Goshford Company produces a single product and has capacity to produce 185,000 units per month. Costs to produce its current sales of 148,000 units follow. The regular selling price of the product is $146 per unit. Management is approached by a new customer who wants to purchase 37,000 units of the product for $79.20 per unit. If the order is accepted, there will be no additional fixed manufacturing overhead and no additional fixed selling and administrative expenses. The customer is not in the company's regular selling territory, so there will be a $5.20 per unit shipping expense in addition to the regular variable selling and administrative expenses. Costs at Per Unit 148,000 Units Direct materials $12.50 $ 1,850,000 Direct labor 15.00 2,220,000 Variable manufacturing overhead 1 1 . 00 1 , 628 , 000 Fixed manufacturing overhead l7 . 50 2 , 590 , 000 Variable selling and administrative expenses 18 . 00 2 , 664 , 000 Fixed selling and administrative expenses 14 . 00 2 , 072 , 000 Totals $88.00 $13,024,000 Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $79.20 per unit. Determine whether management should accept or reject the new business. Complete this question by entering your answers in the tabs below. Accept or Net Income Reject Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $79.20 per unit. Costs and expenses: Total costs and expenses 0 0 0 Net income (loss) $ 0 $ 0 $ 0 Accept or Reject > Complete this question by entering your answers in the tabs below. - Accept or Determine whether management should accept or reject the new business. Determine whether management should accept or reject the new business. I |